Two-way could make VOD pay
The future of cable-delivered video-on-demand (VOD) took a huge step forward last week.

If you missed it, the cable industry formally made a "voluntary" commitment to support Interactive Digital Cable Ready (IDCR) (ie. "set-top-free") televisions with a downloadable conditional access system—also referred to as DCAS.

As a replacement for the existing CableCARD, DCAS is viewed as more elegant and less expensive. The cable industry told the Federal Communications Commission that DCAS is not only feasible, but could be rolled out nationwide by July 1, 2008.

If the FCC goes along with the proposal from the National Cable & Television Association, the implications could be big for cable-based interactive services, especially VOD. That's because today's CableCARD hosts (ie. televisions and set-tops) are good only for one-way broadcast digital cable services. That means no interactive program guides, interactive applications, and, of course, no VOD.

With two-way IDCR televisions entering the market in the coming years, cable will have what amounts to a Trojan horse for VOD -- a key competitive differentiator against DBS. It would also give cable a big advantage over telcos that are just now getting their feet wet with video services.

So, what do the CE companies think about this? So far, there seems to be plenty of support for it. In fact, one of the biggest CE firms on the planet, Samsung, has already given the concept its blessing. A historical supporter of cable's retail efforts in recent years, Samsung, on the day before the big announcement from the cable industry, became the first CE company to sign a deal with CableLabs that will result in two-way devices that use DCAS. You can bet that there will be more -- many more -- very soon, with the Consumer Electronics Show just around the corner.

—Jeff Baumgartner

Video Without Boundaries

The agreement gives VWB the green light to develop OpenCable Applications Platform (OCAP)-compliant middleware on its next-generation MediaREADY media centers.

Fort Lauderdale, Fla.-based Video Without Boundaries has been active in the Internet video-on-demand product market with its MediaREADY line of boxes that combine TV, e-mail, an Internet browser, Karaoke applications and traditional video playback.

It joins fellow CHILA licensees Panasonic, Samsung, LE Electronics, Digeo Inc., ATI Technologies, Broadcom Corp., Digital Keystone, Micronas GmbH, Stexar Corp., and Sunplus Technology Co. Ltd.

"We plan to work closely with CableLabs and to further develop interactive applications that offer consumers a never before seen television experience," said VWB CTO Terry Glatt, a former Pace Micro Technology executive.

Using OCAP technology, electronics manufacturers can offer devices at retail that can run any OCAP applications or services offered by a given cable operator. Video Without Boundaries' new media centers also will include an interface for the removable CableCARD module, which contains the cable operator's conditional access scheme.

SeaChange revenues dip in Q3, bows 'Ingest Blade'
SeaChange International last week posted earnings that were a modest improvement from the previous quarter but still lower than the prior year.

The company posted revenue of $35.3 million for its fiscal Q3, up 35 percent from the $26.2 million in revenues gathered during Q2, but short of the $42.6 million posted in the year-ago quarter.

As a result, SeaChange recorded a net loss of $2.1 million, or 7 cents per share, for Q3. That parallels the revenue figures, with an improvement compared to the $6.6 million loss posted in the second quarter but a backslide compared to the $5.5 million profit the company earned in the fiscal third quarter 2005.

In business segments, SeaChange drew in $11.7 million from its video-on-demand product lines, including $3.1 million from middleware software licensees from Liberate Technologies. In April, SeaChange put up $25.5 million to buy Liberate's business outside of North America. Middleware "is a major investment area for us," SeaChange President & CEO Bill Styslinger said last week during a call with reporters and analysts, referring to its new Liberate assets, as well as the company's VODlink and DVD emulator products, and its IPTV software licensing agreement with Minerva Networks.

IPTV "is really a worldwide hot topic," noted Yvette Gordon-Kanouff, SeaChange's SVP of strategic planning.

Revenues from SeaChange's advertising and broadcast systems segnment, meanwhile, totaled $6.3 million and $4.0 million, respectively. Service revenues came in at $13.3 million, including $1.2 million from SeaChange's newly-acquired subsidiary, The ON Demand Group, a London-based content aggregator that counts customers such as NTL and Telewst.

Just at deadline, SeaChange took aim at advanced VOD applications such as Time Warner Cable's "Start Over" service with an "Ingest Blade" designed to capture hundreds of television programs simultaneously for "immediate" access to on-demand subscribers. Much more about this and the subject of rapid ingest will appear in next week's edition of xOD Capsule.

TiVo enlists Comcast Spotlight,
others, for new ad search platform
TiVo Inc. has set Spring 2006 for the launch of a new TV-based advertising search platform. The ad search system will attempt to deliver relevant, targeted advertising to subscribers who opt-in to receive video ads from specific categories, including automotive, travel, and telecommunications.

Those ads will be offered to subscribers who search for a product by such categories or even keywords, TiVo said. The unspoken aim is to come up with an alternative way for advertisers to reach viewers who tend to skip ads when watching programs recorded to the digital video recorder. The move could also recapture a portion of advertising dollars that have been lost to the Internet in recent years.

The effort will be backed by several media and ad agencies, including Interpublic Media, OMD, Starcom Mediavest Group, The Richards Group, and Comcast Spotlight, the ad sales division of Comcast Cable.

Earlier this year, Comcast and TiVo inked a not-exclusive, multi-year deal that will result in a customized version of the TiVo service and a DVR-based advertising platform.

"TiVo intends to capture the best of the Internet advertising model and create a unique advertising product for the television medium that will provide measurable results," said TiVo President & CEO Tom Rogers.

"It's the first of its kind in the industry, and a platform that is clearly needed in this challenging advertising marketplace," added Tracey Scheppach, vice president and video innovations director at Starcom.

TiVo also posted Q3 results last week, noting it added 434,000 net subs in Q3, and extending its totals beyond the 4 million mark. However, its gross subscription additions were 92,000 for the period, down from 119,000 a year earlier.

Despite breaching the 4 million subscriber mark, TiVo continued to be plagued by the way it obtains most of its customers—from DirecTV. According to TiVo, 379,000 of the net subs added in Q3 (about 87 percent) were DirecTV customers.

The DBS service provider is shifting its focus to a DVR platform powered by corporate cousin NDS Group. However, TiVo's Comcast agreemeint is expected to come into play next year.

TiVo embraces broadband content
Rounding out a busy week for the DVR pioneer, TiVo also pushed ahead with its plans to distribute content directly to customers via the Ethernet ports of its Series2 digital video recorders.

The latest move by TiVo will provide subs with local movie listings and tickets, access to Internet radio stations and podcasts, and to view shared photos.

The services are being fielded with a new crop of partners, including Yahoo!, Internet movie ticketing provider Fandango and Internet radio provider Live 365.

Study: VOD revenues on pace to breach $10 B
Here's a prediction that raised a few eyebrows...
Informa Telecoms & Media believes that VOD or so-called "near" VOD will generate $10.7 billion in revenues by 2010. Also by that time, there will be 350 million homes worldwide that take VOD or nVOD.

The firm also forecasts that North America and Europe will account for 86 percent of that total, with North America leading the way with a 44 percent share.

When broken down by homes with access to VOD/NVOD, the Asia Pacific region will boast 125.4 million such homes, followed by North America (112.5 million), Europe (98.1 million), and Latin America (12.7 million).

Although operators offer a vast library of "free" on-demand content, Informa believes customers will eventually be willing to pay for more content, as well.

"Although [VOD] doesn't generate much in the way of revenues at the moment, it adds value for subscribers and has become a really useful tool for reducing churn," said Simon Dyson, author of the report. "Within a few years subscribers will be migrated to paid content and then significant revenues will be generated."

We are making changes and additions (including international deployments) to our
Web-based "living" deployment chart. If you have a new deployment to report for the VOD Scorecard and the Web-based deployment chart, please contact CED Editor Jeff Baumgartner.